PKSF Guideline for Avoiding Overlapping

Guideline for Avoiding Overlapping

In close consultation with a number of POs, PKSF has recently formulated a policy to avoid overlapping. The main features of the policy are as follows:

Definition of overlapping

When a household receives microcredit from more than one institution, this will be treated as an instance of overlapping although the same household can establish links with more than one service providing institution/agency without being branded so. Therefore, in case of microcredit, one household will be able to receive credit from only institution.

Policies to avoid existing overlapping

(a)                        The microcredit institutions working in a particular village must posses the list of their respective samities/groups along with list of their members, their date of joining, household number and address. The application for membership should contain the photograph of the applicant. Once enrolled, the member should have an identity card containing his/her photograph in it.

(b)                        The microcredit institutions working in a particular village must exchange the list of their respective borrowers once in every three months. The exchange of the list may be done quicker, if necessary, in the village where overlapping allegedly exists.

(c)                        There should be a thana level forum of the microcredit institutions the members of which should meet initially once in every month and later once in every three months to regularly review the situation and take appropriate action to stop overlapping and its recurrence in future.

If the problem still remains unresolved, the matter should be referred to their respective head offices. If still unresolved, the issue may be discussed with PKSF.

(d)                        A list of those members from the same village who have received microcredit from and/or accumulated savings in more than one agency would be prepared and, subject to discussion with the concerned members, they would be allowed to stay with the organization they prefer. However, the concerned members will have to repay all debts to the organization they are leaving and obtain a clearance certificate from it.

(e)                        In order to check if any member received microcredit from more than one agency, the microcredit field staff or officers of the agencies may attend the weekly meetings of centers/samities of one another.

(f) A special seal will be stamped on the Pass Book of the member who received loans from more than one source so that the member can be easily identified. However, caution will have to be applied to avoid negative influence on the concerned borrower.

(g)                        The field workers of the local branch of the microcredit institutions must be fully aware of the list of borrowers that received credit from more than one source and the concerned official would motivate the concerned borrowers to repay loans of the other institution in addition to his/her own. After the loan is repaid, action as per d above would follow.

Policies to avoid future overlapping

(a)    The members organized by one organization cannot be taken over by another organization without prior consultation with the concerned organization.

(b)    The practice of waiting for credit by the borrowers after being organized must be uniform for all the agencies working in a village. In this case duration of waiting varies from 8 to 12 weeks. The members or potential borrowers who failed to receive credit from one organization even after waiting for 12 weeks may be taken over by another organization but in that case they will have to wait for another 8 to 12 weeks under the new organization to receive credit.

(c)    The list of new members along with their addresses of one organization must be circulated to other organizations working in the same village. If no objection is received within 15 days of the circulation, it would be safely assumed that the enlisted people are not members of any other organization and hence the list is final. The persons about whom objection have been received should be absorbed by any of the organizations after mutual discussion. If needed, a household may be provided with a maximum of two loans simultaneously to overcome the situation.

(d)    The member who has just started savings under one organization and was subsequently found to have already received loan from another organization, should receive immediate refund of his/her saved amount along with cancellation of membership.

(e)    The local level officers of the organizations will hold monthly review meetings at the thana forum. The unresolved issues of that review meeting should be referred to higher authorities of the concerned organizations to resolve before the next meeting. If still not resolved, this should be informed to PKSF in black and white.

(f)     Since microcredit is targeted to the poor, there should be uniformity in the maximum size of the first loan in the loan products under it. Here in this case the maximum size of the first loan should be Tk. 4,000 irrespective of the organization delivering it. This can, however, be enhanced in future to take care of inflation. This ceiling can be exceeded for microcredit under special program.

(g)    While considering inclusion of new POs, PKSF would look into the number of other microcredit institutions and their program in the concerned area.